and this would provide for the small number of transferring members until it was exhausted. (Kinnear, Q. 652-655, 672-693, 23,729-23,748.)

585. We have given this matter our most careful consideration. We are satisfied that the present arrangements impose too severe a penalty on transfer from one Society to another, and should, therefore, be modified. At the same time, we are impressed by the arguments put before us by the Ministry as to the dangers of widespread canvassing for transfers which would be likely to result from the granting of immediate title to additional benefits on transfer. We also recognise that the granting of this right would necessitate the loading of the transfer value, and we are advised that actuarially this would involve very serious difficulties, regard being had to the variations in the scales and range of additional benefits and to the fact that the dates of transfer would bear no relation to the periods for which the schemes of additional benefits of the various Societies were current. We have considered whether the suggestions put forward by the Ministry and referred to in the preceding paragraph would provide a reasonable solution of the problem, but we have come to the conclusion that they do not go far enough. We see no sufficient reason for any change in the present position as regards title of additional benefits for new entrants into insurance, but in the case of persons transferring from one Approved Society to another we think that the title to participate in all additional benefits-whether cash or treatment benefits-provided by the new Society should mature at the end of two years after the date of transfer, and we accordingly recommend that this change should be made.

586. We are of opinion that the waiting period of two years will provide sufficient protection against the evil of undue canvassing for transfer.

587. We recognise, however, that even with this limitation the financial position of a Society might be seriously prejudiced if the number of persons admitted to membership by way of transfer were allowed to reach a substantial proportion of the total membership of the Society, unless the transfer values had been increased to cover the extra liability imposed by the grant of additional benefits. We are anxious to avoid such adjustment of the transfer values, partly for the reasons given above and partly because we cannot contemplate that the Society which a person leaves should be charged with the value of additional benefits on the scale given by the Society to which he goes. To provide a safeguard against this risk, we recommend that the Minister should be given power to suspend the right of any Society to accept members by way of transfer if the membership of the Society has been increased in this way since the date of the last valuation by more than a prescribed proportion fixed in accordance with actuarial advice.

588. In the case of transfer between Branches of the same Society, where in practice no transfer of membership is likely to arise unless the member moves from one locality to another, we think that it might be left optional to the Societies to allow the title to participate in the additional benefits of the new Branch to be given immediately on transfer. In the special circumstances indicated it is unlikely that the financial position of any Branch accepting transfers would be sensibly affected by this concession.

589. There is one type of case in which we think that a special exception might be made to the normal provision as to title to participate in additional benefits. We have referred in paragraph 461 to certain classes of insured persons, such as bank clerks, insurance officials and the like, who normally pass out of insurance at a comparatively early age by reason of their rate of remuneration rising beyond the limit of £250 a year. These persons are mostly congregated in a few Approved Societies formed specially for their benefit, and these Societies, by reason of the character of their membership, which results in low benefit claims, have large surpluses on valuation. The anomalous position then arises that before a scheme of additional benefits has been brought into operation or during its currency, many of the persons who, as members of the Society, contributed to build up the surplus pass out of insurance and are consequently no longer eligible to participate in the benefits.

590. It was suggested to us by Mr. Duncan Fraser, giving evidence on behalf of the Royal Insurance Officials' Benevolent Association, that in order to deal with this position there should be a special extension of the period during which title to additional benefits should continue after the cessation of insurable employment (App. XXVII, 20; Q. 11,085 and 11,106-11,113). The same suggestion was supported by witnesses representing the Stock Exchange Clerks', Baltic Corn Exchange and Lloyds' Health Insurance Societies (Q. 85358552), and also by Sir Walter Kinnear (Q.23,397, 23,399 and 23,407-23,427). We think that in these exceptional cases such special extension might reasonably be made as regards title to participate in additional benefits in the form of treatment. therefore recommend that provision should be made to the effect that where the valuer certifies that a substantial part of the surplus of a Society has accrued in respect of members who have ceased to be insured as employed contributors by reason of passing over the income limit, or are likely so to cease in the near future, the scheme of additional benefits may, subject to the approval of the Minister, provide for an extension of the period during which additional benefits, other than cash benefits, may be provided to persons who are, or within a period provided by the scheme have been, members of the Society.

We

SECTION F.-EXTENSION OR ALTERATION OF THE LIST OF ADDITIONAL BENEFITS.

591. A list of the additional benefits, one or more of which may be adopted by a Society in the enjoyment of a disposable surplus on valuation, is contained in the Third Schedule to the Act and in the Regulations made under paragraph 14 of that Schedule. The list comprises, in all, no fewer than 19 different benefits, and we have had to consider whether additions to the list are desirable, or whether, on the other hand, any of the items included in the present list are for any reason unsuitable or redundant, and might, therefore, with advantage be deleted. On this subject we have had some interesting evidence from the Ministry of Health (see App. I, B, 201-219, and Kinnear, Q. 23,687-23,718). We have already referred in Chapter V to some of the more important of the present additional benefits and have indicated to what extent they have been adopted by Societies. We will now deal with some of the benefits included in the list which have been adopted by very few Societies or have not been put into operation at all.

PROPOSED REMOVAL FROM PRESENT LIST.

592. No. 1 on the list of additional benefits is "medical treatment and attendance for any person dependent upon the labour of a member." On this, Sir Walter Kinnear said, "As far as England is concerned, this benefit has never been adopted by any Society, and the provision is really one appropriate for consideration in connexion with the general scope of medical benefit. It is scarcely suitable as an additional benefit. It is of much greater importance than the question of a mere additional benefit, and its cost would be much greater than could possibly be given, as far as I can conceive, by any individual Society as an additional benefit. I therefore suggest that that additional benefit should be eliminated" (Q. 23,687). We agree that an extension of the scope of medical benefit of the kind. contemplated should not be made by way of an additional benefit out of the surplus funds of certain Societies, and we would point out. moreover, that, in accordance with Section 75 (5) of the Act, this particular benefit, if adopted by any Society, would have to be administered, not by the Society itself, but by the Insurance Committee or other body responsible for the administration of medical benefit. On the ground of its impracticability under present conditions, we therefore recommend that it should be removed from the list of additional benefits.

66

593. No. 3 on the list is an increase of sickness benefit and disablement benefit in the case either of all members of the Society, or of such of them as have any children or any specified number of children, wholly or in part dependent upon

them." This benefit really falls into two parts: (1) payment of increased benefit to all members, and (2) payment of increased benefit to members with dependent children. The former of these is now a feature of the additional benefit schemes of nearly all Societies, and is working well. As regards (2), the benefit is open to criticism on the ground that it makes no provision for the payment of the additional benefit in respect of a dependent wife. We are also advised (Kinnear, Q. 23,689) that actuarial calculations involving an amount of work wholly disproportionate to the purpose to be served would be necessary in the case of each Society proposing to adopt the benefit. We think that the question of allowances of this nature is more appropriate for consideration in connexion with the payment of increased sickness or disablement benefit to all insured persons with dependants, a subject with which we have dealt in Chapter XI of our Report. We therefore recommend that additional benefit No. 3 should be restricted to "an increase of sickness benefit and disablement benefit."

594. Additional benefit No. 4 is "the payment of sickness benefit from the first, second or third day of incapacity." We can understand a Society desiring to pay sickness benefit from the commencement of illness (and not a few Societies have, in fact, adopted this as an additional benefit for their members) or, on the other hand, being satisfied with the normal provision of the Act, under which benefit is paid only from the fourth day of incapacity; but it appears to us to be an altogether unnecessary refinement to contemplate the possibility of any arrangements intermediate between these two courses. Furthermore, the actuarial calculation of the estimated cost of paying sickness benefit from the second or third day of incapacity would be a heavy and expensive task, compensated by no corresponding advantage. We therefore recommend that the words "second or third" should be deleted from the definition of this benefit.

595. Additional benefit No. 5 is "the payment of a disablement allowance to members though not totally incapable of work." This benefit has not been adopted by any Society, and would be extremely difficult to administer satisfactorily. Without a degree of supervision which in most Societies would be quite impossible, it would be likely to lead to serious abuse. We therefore recommend that this benefit should be removed from the list.

596. Additional benefits Nos. 9 and 10 are the payment of pensions or superannuation allowances or of contributions to superannuation funds. The first of these benefits appears to us to be open to serious objection, on the ground that its enjoyment would necessarily be restricted to a small minority of the members of a Society at the expense of the general body of members. The second of these benefits-payment of contribu

tions to superannuation funds in which the members are interested-is theoretically attractive, but is believed to be unworkable. The payments are to be subject to the prescribed conditions, and the regulations which have been made show the character of the questions in which the administering Departments would be involved, if this additional benefit were put into practice. These questions extend to the constitution of the superannuation fund, the character of the benefits provided out of it, the manner in which its moneys are invested, and its financial position as shown by its periodical valuations. As the point at issue is the payment of money which has arisen out of contributions compulsorily levied under an Act of Parliament to a fund established on an altogether different basis, it is inevitable that the regulations should provide, as they do, for the intervention of the Joint Committee in the control of the fund to an extent which, if intervention were conceded at all, could scarcely be tolerated by the management of a private and self-governing institution. There appears to be no demand for this form of additional benefit, and if a demand arose we are satisfied that the conditions prescribed by the regulations are, and must be, such that the proposal would not be pursued. We anticipate, therefore, that no use will be made of additional benefit No. 10. At the same time it must not be overlooked that the need for provision of this kind has been much lessened by the introduction of the Contributory Old Age Pensions Scheme. We recommend therefore, that additional benefits Nos. 9 and 10 should be removed from the list.

66

66

597. Additional benefit No. 11 is payments to members who are in want or distress, including the remission of arrears whenever the arrears may have become due." The first part of this benefit, viz., payments to members in want or distress, has evidently met a need and has been adopted by many Societies, but the latter part which, it is to be noted, is restricted in its operation to members in " want or distress," a qualification which is somewhat difficult to apply, has now been rendered unnecessary by reason of the inclusion in the Regulations, under paragraph 14 of the Schedule, of a new additional benefit (No. 19), viz., the payment in part of any sickness and disablement benefits to which a member, who is an employed contributor, would otherwise have been disentitled owing to arrears due to inability to obtain employment, and the payment of any maternity benefit to which, for the like reason, he would otherwise have been disentitled." We recommend, therefore. that additional benefit No. 11 should be restricted to "payments to members in want or distress."

598. We would also point out that the new additional benefit No. 19 would itself become superfluous if effect were given to our recommendation in paragraph 655, that there should be no